FIN 370 Week 5 Assignment Help | Quiz | University Of Phoenix
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- 03 Dec 2019
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FIN 370 Week 5 Assignment Help | Quiz | University Of Phoenix
1.
All of the following
are incremental cash flows attributable to the project EXCEPT:
Multiple Choice
o
financing costs.
o
opportunity costs.
o
complementary effects.
o
substitutionary effects.
2.
To correctly project cash flows, we need to consider
all of the factors EXCEPT:
Multiple Choice
o
All of the options are factors that need
to be considered.
o
the likely impact that the new service or the product will have on the firm's existing products' cost and revenues.
o
the new product's or service's costs and
revenues.
o
use of assets or employees already
employed by the firm.
3.
Which of the following measures the operating cash
flow a project produces minus the necessary investment in operating capital,
and is as valid for proposed new projects as it is for the firm's current
operations?
Multiple Choice
o
Free cash flow
o
Investment in operating capital
o
Operating cash flow
o
Sunk cash flow
4.
Your company is considering a new project that will
require $100,000 of new equipment at the start of the project. The equipment
will have a depreciable life of 10 years and will be depreciated to a book
value of $25,000 using straight-line depreciation. The cost of capital is 11
percent, and the firm's tax rate is 34 percent. Estimate the present value of
the tax benefits from depreciation.
Multiple Choice
o
$13,607.52
o
$15,017.54
o
$16,997.13
o
$14,841.29
5.
Accelerated depreciation allows firms to:
Multiple Choice
o
receive more of the dollars of
depreciation earlier in the asset's life.
o
not pay any taxes during an asset's life.
o
receive more of the dollars of
depreciation later in the asset's life.
o
receive less of the dollars of
depreciation earlier in the asset's life.
6.
You are trying to pick the least expensive car for
your new delivery service. You have two choices: the Scion xA, which will cost
$13,000 to purchase and which will have OCF of −$1,200 annually throughout the
vehicle's expected life of three years as a delivery vehicle; and the Toyota
Prius, which will cost $23,000 to purchase and which will have OCF of −$550
annually throughout that vehicle's expected five-year life. Both cars will be
worthless at the end of their life. If you intend to replace whichever type of
car you choose with the same thing when its life runs out, again and again out
into the foreseeable future, and if your business has a cost of capital of 12
percent, what is the difference in the EAC of the two cars?
Multiple Choice
o
$413.25
o
$310.38
o
$361.13
o
$317.88
7.
Which of the following is a technique for evaluating
capital projects that tells how long it will take a firm to earn back the money
invested in a project plus interest at market rates?
Multiple Choice
o
Profitability index
o
Payback
o
Net present value
o
Discounted payback
8.
Compute the NPV
statistic for Project X given the following cash flows if the appropriate cost
of capital is 10 percent.
Project X
Time 0
1 2 3 4
Cash Flow –$ 100,000 –$ 36,000
$ 200,000 $ 210,000 –$ 10,000
________________________________________
Multiple Choice
o
$183,507.96
o
$247,410.67
o
$262,622.77
o
$248,962.50
9.
The benchmark for the profitability index (PI) is the:
Multiple Choice
o
zero or anything larger than zero.
o
managers' maximum number of years.
o
zero or anything less than zero.
o
cost of capital.
10.
Compute the PI statistic for Project X and note whether
the firm should accept or reject the project with the cash flows shown as
follows if the appropriate cost of capital is 10 percent.
Time: 0 1 2 3 4 5
Cash flow: −250 75 0 100 75 50
Multiple Choice
o
24.41 percent, accept
o
−9.77 percent, reject
o
−24.41 percent, reject
o
−0.0977 percent, reject
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